Mumbai: Markets on Monday snapped three sessions of mild losses to notch its highest close since mid-March, as recently hit banking stocks such as SBI recovered, while ONGC gained after posting a surge in quarterly earnings.
However, sentiment remained cautious ahead of inflation data on Tuesday. Wholesale prices are expected to have edged up in July, giving the Reserve Bank of India less room to cut interest rates at its policy review in mid-September.
Barring any big surprises in the WPI data, analysts said domestic markets could be stuck in range-bound trading as investors wait and hope for further action from the European Central Bank or the US Federal Reserve.
At home, investors are keen to see whether the government announces new fiscal measures or other action to attract foreign investment, after newly-appointed finance minister P. Chidambaram said he was working on new initiatives.
Only two things can change the equation, otherwise the market is stuck in a tight range. If there’s any reforms announced, which is not very probable, or if the US or European announce stimulus measures.” Jagannadham Thunuguntla, head research at SMC investments and advisors Ltd.
“Inflation won’t be low, and will remain high enough that RBI cannot cut interest rates. It is a poor monsoon that is tightening the hands of the RBI,” added Thunuguntla.
The benchmark BSE index rose 0.43% to 17,633.45 points, its highest close since 15 March. The 50-share Nifty index at the NSE rose 0.52% to 5,347.90 points.
State Bank of India shares rose 1%, after earlier falling as much as 1.5%. Shares of India’s biggest lender slumped 4.1% on Friday after reporting a surge in bad loans during the April-June quarter.
Earlier, Deutsche Bank downgraded SBI to “hold” from “buy”, calling April-June “one of its worst quarters in terms of asset quality” in a report after the results.
State-run producer Oil and Natural Gas Corp. Ltd rose 0.6% after the company reported over the weekend a higher-than-expected jump in quarterly profit.
The Maruti Suzuki India Ltd stock gained 1.6% on rising hopes the auto maker will announce a resumption of production at its Manesar plant after violent clashes between management and workers last month.Reuters
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